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GO board taking Tartsinis to task Dated : 19-10-2007

The chief executive of London-listed Global Oceanic Carriers (GO Carriers) is under investigation by the company's board and financial advisors over allegations he improperly transferred money from the public company to a private bank account.
Michael Tartsinis made unauthorised use of the bank account of a former business partner on at least two occasions, according to allegations in documents reviewed by TradeWinds. The dollar amount of the transfers could not be determined.
"I don't know what you're talking about," said Tartsinis before declining to field further questions in a brief interview as TradeWinds went to press.
The transfers are at the centre of an inquiry by the company's independent directors, aided by its financial advisor, Jefferies, sources tell TradeWinds. The board has retained forensic accountants, the sources says. One director who is also a member of GO's audit committee submitted his resignation earlier this month without publicly stating a reason. GO Carriers is listed on the Alternative Investment Market (AIM).
"We have grave concern about the potential financial, civil and criminal liability you may have exposed our client, its shareholders and directors to," states a lawyer from the complaining company, Custodian Shipping Ltd, in a 12 September letter to Tartsinis.
The Custodian letter also references payments made from the account to Ultra Shipping Ltd, understood to be a company privately owned by Tartsinis.
Tartsinis states through an attorney in a 13 September response that he mistakenly believed he had retained ownership of Custodian when he and former business partner Nicolas Pappadakis divided their companies last spring. Through counsel, Tartsinis portrays the transfers as innocent but acknowledges "the company [Custodian]probably should not have been used for these two transactions".
Pappadakis is well known in the industry through his chairmanship of Intercargo but is also no stranger to GO Carriers. He served as the company's non-executive chairman prior to his resignation in May.
According to the Tartsinis reply, money transferred in June was payment for "certain advice…given by Mr Tartsinis to a Far Eastern company relating to shipowning and shipmanagement practices and structures". An invoice was raised through Custodian Shipping, "which, in error, included details of Global Oceanic Chartering Limited's bank account rather than [Custodian's]". Global Oceanic Chartering is a subsidiary of GO Carriers.
Tartsinis explains further that "neither Global Oceanic Chartering Ltd nor its parent provide this type of service". The error was discovered "immediately" and the money transferred from GO Chartering to Custodian, the letter indicates.
In a separate instance in August, the Custodian account "was used to supply an agency service tied into a charter".
Payments were made to third parties including GO Chartering, which received "a brokerage fee" at "normal industry rates".
Custodian's legal counsel makes clear in a 19 September letter that the company is not satisfied with Tartsinis's explanation. It calls the reply "unresponsive" to demands in the earlier complaint, which included a letter indemnifying Custodian from all liabilities and a bank guarantee covering future liability "due to your unauthorised activity".
The board resignation announced on 4 October by GO Carriers came from Theo Phanos, co-founder of Trafalgar asset managers and once a major shareholder in GO Carriers. No reason was stated. Attempts to reach Phanos at his London office were unsuccessful.
Underwriter Jefferies took GO Carriers public on London's AIM exchange in May 2005.
Whereas on US listings an underwriter's due-diligence responsibilities cease with completion of the IPO, the financial sponsor retains oversight duties on the AIM for the life of the company. In effect, it takes the place of a regulatory body like the Securities&Exchange Commission (SEC) in the US. These "nominated advisers" are sometimes known by the shorthand "nomads".
Nick Davies, Jefferies's senior shipping man in London, declines comment on the GO Carriers matter.
GO Carriers operates a fleet of six bulkers with a seventh scheduled for delivery this month. The company has cited further growth ambitions and hinted at a public listing in the US.
By Joe Brady, Stamford, published: 19 October 2007
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